J. Dinkins G. Grange is an attorney in Northeast Florida, helping his clients find solutions to their financial problems, which in some cases includes bankruptcy in some cases. This Blog contains general bankruptcy relevant information. His practice includes representing clients in various areas of civil litigation including Fair Debt Collection Practices Act, Chapter 7 and Chapter 13 bankruptcies, foreclosure defense and probate.

Wednesday, September 28, 2011

The Eighth Circuit BAP found that a chapter 13
debtor may strip off a wholly unsecured lien on his principal residence even
where the debtor is not entitled to discharge. In re Fisette, 11-6012 (B.A.P. 8th Cir.,
August 29, 2011). In so holding the court joined the other Circuit and BAP
courts that have held that the reasoning in Nobelman v. Am. Savings Bank, 508 U.S. 324 (1993) establishes the right
to strip off wholly unsecured residential liens. Turning to the issue of whether
ineligibility for discharge under section 1328(f)(1) precludes the otherwise
permissible lien stripping, the court stated: “We hold that the strip off
of a wholly unsecured lien on a debtor’s principal residence is effective upon
completion of the debtor’s obligations under his plan, and it is not contingent
on his receipt of a Chapter 13 discharge.” Unlike the courts that have found that
section 1325(a)(5) precludes lien-stripping in a chapter 20, the Fisette court recognized that, pursuant
to the statutory language, the requirements of section 1325(a)(5) were not
applicable to a claim that was not an allowed secured claim. The court concluded
its analysis with a finding that the creditors whose liens were stripped would
be entitled to distribution of the estate along with the other unsecured
creditors.

The Trustee filed a notice of appeal to the Eighth
Circuit on September 21st.

Tuesday, September 27, 2011

Experts agree that in order for the economy to recover, the
housing market first must be stabilized by preventing avoidable
foreclosures. While there is no single solution to the foreclosure
crisis, one promising approach is the Principal Paydown Plan, which
would provide immediate relief for qualified homeowners in bankruptcy
who find themselves underwater on their mortgages. By reducing the
interest rate on mortgages to 0% for 5 years, monthly payments would
be lowered and every dollar applied to the principal. This Plan would
provide help for many American families trying to stay in their
homes, stabilize communities, and bolster the housing market and
economy as a whole. Developed by the National Association of Consumer
Bankruptcy Attorneys (NACBA), the plan is ready for immediate
adoption.

The NACBA has been urging the Obama Administration to adopt the
Principal Paydown Plan ("PPP") as one meaningful step to
address the current foreclosure crisis. Last week the Administration
launched an effort to encourage the American public to create, share
and sign petitions that communicate views about the government’s
actions and policies. We know the Principal Paydown Plan has promise
– help us make sure it gets the attention it warrants. You can
click
here to sign the petition.

*Please note that you must create a whitehouse.gov account to
sign the petition, however, it only takes about two minutes to do
that. It’s fast and easy!

Monday, September 26, 2011

Over the past year or so, Florida has
seen a glut of foreclosure filings, many times involving mortgagees
that are simply not willing to bend to do what really needs to be
done to keep you in your house. This has funneled homeowners either
into surrendering their house and filing a Chapter 7 bankruptcy, or
for those with regular income wanting to keep their house, into a
Chapter 13 bankruptcy. Also, those with regular incomes, two or more
mortgages, with house values that are less than the principle balance
of their first mortgage, Chapter 13 may allow one or more mortgages
to be eligible for a cram-down.

Recently, bankruptcy filings have
fallen off. Maybe the economy is starting to do better. Maybe its
just the time of the year, as bankruptcies typically fall off during
certain months of the year anyway. There is talk of a second dip in
the economy, which may lead to more reductions in pay to the
employed, and more businesses closing, leaving more people out of
work.

For those wishing to try to keep their
home by filing a Chapter 13 bankruptcy, this blog is for you.
Hopefully the following tips you will find useful, and lead to a
successful completion of your bankruptcy.

Preparation. Success
with a Chapter 13 takes planning, as they are not cookie cutter
events. Every Chapter 13 bankruptcy is unique. There is a lot of
information on the internet about not only Chapter 13 bankruptcies,
but debt relief in general. An excellent source of information
about Chapter 13 bankruptcies can be found at the www.uscourts.gov.
Doing your homework before proceeding to an attorney's office can
greatly enhance your chances of making correct decisions towards the
planning and implementation of your bankruptcy. These decisions can
have a direct impact on your chances of successfully completing the
bankruptcy, and your quality of life during your bankruptcy, which
typically last from 3 to 5 years.

Budget. Budget. Budget. Your
bankruptcy is centered around your living expenses, and your living
expenses may help determine whether a Chapter 13 bankruptcy is
feasible. One of the problems people run into when filing
bankruptcy is having not properly accounted for all necessary living
expenses at the outset. This will determine how much money you will
be able to repay, and your realistic expectations of success in the
bankruptcy.

Payroll Deductions. During
your Chapter 13 bankruptcy, depending on the jurisdiction you are
filing in, you may need to turn over your tax refund money to the
Trustee. If you plan ahead of time, you can hopefully minimize any
tax refund, thereby putting more money into your pay check. One
major change you will experience is that you will not have the
advantage of being able to depend on receiving a tax refund during
the bankruptcy.

Organize Documents. Your
attorney will be asking for a lot of documents. Some attorneys
place this list on their website, while others have the list in
their office. A typical list will include deeds, mortgages, vehicle
titles or registration, pay advices for 7 months, financial accounts
for 7 months, 12 months evidence of any cash advances, and 4 years
of tax returns. Should you not have your tax returns, you should be
able to order a transcript by filing out Form 4506-T.
You will also need payoff figures for all secured debts, together
with how many payments you have left if less than 5 years.

Don't Hide Anything.
As long as your attorney knows of everything about your assets,
transactions, debts, income, and expenses, he or she should be able
to plan accordingly. I have run into horror stories that have ended
up costing my clients a lot of money because of either hiding things
or misstating the truth. If your attorney doesn't know the truth,
he or she may not be able to help you when things start heading
South.

Arrange Filing Date With Your
Finances. There is a 14 day
window in which to file your Plan after the filing of the
bankruptcy. The Plan is a document, after approved by the Court
through a process called Confirmation, that outlines what moneys
will be paid to the Trustee, and how the Trustee will distribute the
funds. The initial payment is due 30 days after filing.

Pay Without Receiving Bill.
When you file bankruptcy,
because of something called an Automatic Stay, you will probably
stop receiving bills for things you are accustom to paying only
after receiving a bill. For example, if you normally receive a
statement on leased property, and then send in your payment, you
should contact the leasing company and find out where to send the
payment while in bankruptcy, and mail it in. Why does the company
stop sending statements? They are afraid this could be construed as
a collection effort, which has consequences while in bankruptcy with
the automatic stay in place. Also, according to your plan, there
are some payments that you may be making directly to a creditor.
Make sure the payments are timely made.

Miss Work!. OK,
that's a little strong. But you will have to attend a meeting with
your attorney and the trustee after filing. It typically takes
about 5 minutes, and is assigned to a 30 minute time slot, along
with some other bankruptcy filers. You will receive the date and
time of this meeting shortly after filing, and is referred to as a
341 Meeting or Meeting of Creditors. I really don't like the name
Meeting of Creditors because, while creditors can attend, it is
unusual. A more descriptive name would be something like Meeting
With Trustee. Along with the notice containing the date and time of
the 341 Meeting will be a time and date for a Confirmation Hearing.
Check with your attorney to see if you.

Discipline.
That's right, now for the hard stuff, unless you are disciplined to
stick with the Plan, and a budget according to the papers filed with
the Court. The more disciplined you are, the easier it will be.
Few people find it easy to successfully complete a Chapter 13 Plan
and receive a Discharge. Should things not go as planned, get with
your attorney right away, as there may be things he or she can do
through the Trustee or the Court to increase your chances of success
considering your new circumstances.

Friday, September 23, 2011

The real answer is, it depends. Many factors have to be considered, including whether you
file a Chapter 7 or Chapter 13 bankruptcy, how much money you owe on
the property, and what is the property worth.

I recently spoke with a client that was
told by another attorney, during a 15 minute consultation, that he
would lose his rental property if he filed bankruptcy. After all,
people assume they will lose everything when they file bankruptcy
anyway. If the property is turned over to
the bankruptcy estate and liquidated, then it is expected. But what
if the attorney is wrong, and the debtor is able to keep the house.
Well, maybe the attorney is then viewed as a hero. My point is, during a
consult, it is always easy, and safe, for an attorney to simply say you will
lose the property. But such is not necessarily always the case.

CHAPTER 7

First, lets take a look at a Chapter 7
bankruptcy. When you file a Chapter 7 in Florida, there a federal
and state exemptions that determine what you can keep, and what will
become property of the bankruptcy estate and liquidated. This will
vary from state to state. For example, in Florida, one gets an
unlimited homestead exemption, whereas most states limit their
homestead exemption; this refers to the amount of equity you can have
in your home that is exempt from being able to be administered by the
Trustee. Unfortunately, this does not apply to rental property.
There may be some statutory exemptions that can cover some of the
equity in the rental property to make it feasible for the debtor to
keep the property. Of course, if there is no equity in the property,
it would be highly unusual that the trustee would want the property.
The trustee will only sell property if the trustee can obtain a net
gain, thereby allowing for a distribution of funds to unsecured creditors.

For example, if a rental house with a
market value of $100,000 had a mortgage with a principal balance of
$97,500, and it would cost the trustee $3,000 to sell the property,
the net after sale would be $97,000. This is not enough to cover the
mortgage. The trustee would only sell the property if there is going
to be money left over to send to creditors. So, in practice, there
needs to be more than just minimal equity in the proeprty.

CHAPTER 13

Now lets look at a Chapter 13.
Usually, its you can keep your property in a Chapter 13, including
rental property. However, there are other considerations we must
look at. For example, the property could be eligible for a cramdown.
That is, the mortgage could be modified, bringing the balance owed
down to the value of the property, and interest modified to be
something above prime, with the acceptable interest rate often either
determined by agreement of the parties, or determined by the Court.
This could have the effect of lowering the monthly mortgage payment,
which could have an impact on whether it is feasible to keep the
property. One can do a cramdown on many types of secured property,
including rental property, but not your homestead.

But, this is far from the only
consideration as to whether you will be able to keep the property in
a Chapter 13. The trustee will most likely look at whether you will
receive a net profit from the property. If not, then the Trustee
will probably take the position that the property is not necessary
for the debtor to complete the Chapter 13, and ask for the property
to be liquidated. The trustee doesn't want the debtor to keep the
property if it is shown it will have a net negative cash flow, as
this diminish the debtor's disposable income, thereby diminishing the
amount of money the debtor could send to the Trustee.

Determining whether or not rental
property can be kept when filing bankruptcy has to be determined on a
case by case basis. If you have any questions about your particular
situation involving rental property, you should consult with a local
bankruptcy attorney that will give you the time to properly advise
you as to your options.

BAC is based in Charlotte, North
Carolina, and after acquiring Countrywide Financial Corp., has
maintained the acquisition as a separate entity. Apparently,
Countrywide has sold faulty loans, for which they have been sued. An
analyst with Credit Agricole Securities USA has booked at least $30
billion of cost for faulty home loans, most of which were sold by
Countrywide.

Back in 2007, Countrywide was the
largest mortgage originator in the United States, with 17 percent of
the market. It is questioned as to whether Bank of America has
enough reserves to pay claims. One of the claims were filed by the
Federal Housing Finance Agency, which sued BAC and 16 other banks to
recover $200 billion in mortgage-backed securities sold to Fannie Mae
and Freddie Mac (the article list as Freddie Mae).

Countrywide has $11 billion in assets
that could be depleted through demands to repurchase defective
mortgages.

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Jacksonville Bankruptcy Attorney -- J. Dinkins G. Grange, Esquire

I am a consumer bankruptcy attorney
helping people with their financial situations. As a bankruptcy lawyer, I help people find
various alternatives towards handling their financial problems, and
if needed, I can provide legal assistance to consumers seeking relief
under the bankruptcy code. I can be contacted by email at dgrange@grangelaw.org. I am available by appointment
during the week and most evenings.

I am located in Green Cove Springs on North Street, and Middleburg on Palmetto Street.

I am a member of the National
Association of Consumer Bankruptcy Attorneys (www.nacba.org),
Jacksonville Bankruptcy Bar Association, American Bar Association,
Florida Bar, and Jacksonville Bar Association.

I have also been designated a debt
relief agency by Congress and the United States Supreme Court and I
help clients file for bankruptcy relief under the bankruptcy code.

Disclosure:

We are a debt relief agency. We help clients file for bankruptcy relief under the Bankruptcy Code. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. This blog site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.